Growth indices in Latin America are on the rise, education and health are improving, exports are climbing, institutions are becoming more democratic—but poverty and inequality indicators refuse to budge.
Wanda Engel Aduan, chief of the Social Programs Division in the IDB’s Sustainable Development Department, understands this tragic aspect of Latin American society well. “I was born in Brazil, the most unequal country in the world, in a very poor family,” she explains. A teacher by profession, Engel sees education as the best hope for finally closing Latin America’s equity gap, and also as a means of preparing people to function in life, politics, and personal and institutional relationships. She recently spoke to IDBAmérica about the goals of a series of seminars she organized for the Bank’s Social Development Week in late October 2005.
IDBAmérica: As an expert on social issues in Latin America with considerable professional experience in the field, first in Brazil as Secretary of Social Development in President Cardoso’s cabinet and now at the IDB as Chief of Social Programs, why do you think inequality and extreme poverty are so difficult to reduce or eradicate?
Engel: For a long time, the focus has been essentially economic, centering on the relationship between people and production. People thought that boosting production, wealth and economic growth would fix everything. But then they realized that human issues were important too. That was the beginning of projects that targeted educational and health reform, but always with a focus on increasing people’s capacity to produce.
However, the dynamics of inequality are heading in another direction, which has its origins in each country’s system of wealth distribution. In today’s distribution system, the rich get richer, while the poor get a little something and the very poor get nothing. Even though some studies show that growth actually improves poverty indices, the only way to wipe out extreme poverty is to change the distribution system.
IDBAmérica: In some countries, such as those of Europe, the adoption of a more just and equitable distribution systems was imposed by social consensus, revolutionary or not. How can Latin America cope with this kind of change in the distribution system without the support of a committed social consensus? What could happen if no agreement is achieved along these lines?
Engel: Today’s information and globalization age has enabled even the very poor to be conscious of their rights and of how valuable equality is. This produces tremendous dissonance between the ideal that everyone proclaims and the utter inequality in which much of society lives. This problem gets magnified in urban centers, where wealth and poverty coexist every day. In certain ways, this phenomenon triggers incredible social crises, crises of violence and marginality. When young people die violent deaths, it represents a great loss for their countries.
This system of inequality is based on “social construction”; it is a social, cultural and institutional issue. We need a more supportive society. The problem is how to raise taxes for society’s richest members if they are the people who hold economic and political power, and they also control the media. If the people who control some 46 percent of a region’s total income are paying a mere 10 percent of the taxes and don’t agree that everyone should contribute to the common good, things will be very bad for all of us.
An appeal must be made to individual responsibility, to paying taxes and volunteering one’s time. We must convince people that helping to boost the country [in this regard] will benefit its poorest citizens as well as those who are paying more. It benefits everyone. Many governments in both Latin America and elsewhere understand that this kind of social inequality has negative repercussions for the economy and [also] chokes off development.
IDBAmérica: What are the options at this point?
Engel: We must identify policies that in some way attempt to reduce inequality and analyze its components in cultural terms or that examine political institutions in detail. The idea of the Social Development Week that we organized here at IDB headquarters last year was to explore ways of creating the kind of social development—in addition to human and economic development—that would enable societies to become more supportive, to look at every one of their members. All of that would be combined with transparent, fair governance capable of creating the conditions favorable to a new commitment to change the logic of today’s wealth-distribution system.
IDBAmérica: Are there any current developments in the region that might be conducive to positive change in the area of inequality?
Engel: Conditional transfers of funds are one of the most interesting and important distribution policies being used today, because they protect a country’s population from economic and financial shocks while guaranteeing a minimum of security. [“Conditional transfers” are programs in which the government distributes funds to the poorest sectors for a set amount of time, conditioned on the recipients’ making certain commitments in the areas of education and health.]
Mexico’s Oportunidades program or Bolsa Família in Brazil, in addition to many others, combine social protection with support for the human aspects. However, providing money is not enough. You need to get involved with the families and be with them during the process. Chile Solidario is the most comprehensive in that regard. The social educators visit the families and work with them to come up with a family development plan that guarantees all family members access to job training and economic development programs. What this experience seems to be showing is that it is possible to climb out of extreme poverty.
The myth that there is a structural kind of poverty—extreme poverty—that will never change is what feeds the conviction that it is better to invest in those who are not so poor, because you’ll move them ahead more rapidly and with less effort. But these programs show that we should not give up.
IDBAmérica: How can the IDB promote these changes? Or is it promoting them now?
Engel: First of all, the Bank is doing studies that go beyond economics. However, the studies are carried out by economists, and they use methodology that everyone finds persuasive. That’s what counts. The Bank has created instruments that promote comprehensive programs with defined goals, emphasizing impact and results rather than supporting a specific sector, such as health or education. The trend is to confront problems in the most comprehensive, fully multidimensional way.
The Bank is also helping modernize institutions in order to make them strong and reliable, because the region’s institutions are still very weak. Political parties do not have real platforms, for example; they tend to be made up of groups of friends who share common interests. The idea of a government program takes second place.
IDBAmérica: Are you optimistic about the future, or are you a pessimist?
Engel: We are at a stage that is conducive to economic growth, foreign investment and institutional progress; we have democratic governments and free elections. We must believe that social consensus will be possible in the future. We do have examples of social consensus on particular issues, which could be a good beginning. Chile has arrived at a post-Pinochet consensus.
Our countries have been divided by a general lack of awareness. But in today’s globalized world, people are realizing that working for the common good benefits us all and has a positive effect on the economy.